Proposals due to be presented to the Prime Minister will reportedly recommend the government replace Universal Credit and potentially the disability benefit PIP for around one million young people in the UK, reducing direct cash payments in exchange for more intensive employment support.
Alan Milburn, the senior Labour figure developing the plans, has said the welfare system "just isn't working for young people" and that money needs to be redirected from welfare to employment support to end the NEET crisis. NEET refers to young people not in employment, education or training.
Separate Benefits System for Young People
Chris Smyth, public policy editor at the Financial Times, revealed on the Political Fix podcast that Milburn's review will call for a separate benefits system for young people. Under the plans, they would receive less cash but gain access to more intensive health and employment support.
Mr Smyth explained that the needs of a NEET who has never worked differ from someone in their 50s who has fallen out of employment after a long period. He said the funding for the new system would come from the cash payments young people currently receive, which can sometimes act as a barrier by disincentivising job-seeking.
"This will possibly replace Universal Credit and maybe even PIP as well," Mr Smyth said. "So it is quite far-reaching and all the indications are that Andy Burnham is on board with this."
Prime Minister's Social Contract Vision
Last Thursday, the Prime Minister delivered a speech to a youth charity in Manchester outlining his vision for a new social contract for young people. He pledged guaranteed support while warning that the Government cannot simultaneously fund that support and finance young people remaining on benefits.
"It's got to be a huge change. It's not just a DWP [Department for Work and Pensions] report," the PM said. "We've got to think about a whole government, whole society change in the way we support young people - a social contract."
He added that there needs to be a new guarantee of support when young people need it, but also a clear expectation that they take up that support as in-work support, because "it's not going to be good for anybody to be out of work in their 20s."
Rising NEET Numbers
According to Office for National Statistics figures this year, there were around one million people aged 16 to 24 who were NEET in March 2026, a rise of 89,000 compared with January to March last year.
Mr Milburn, a former Health Secretary in the Blair government, told the Guardian: "We've got to have a different conversation about the welfare system, it just isn't working for young people. We need to redistribute money from the welfare system to more employment support if we are going to end the Neet crisis."
He said that for the vast majority of young people with autism, ADHD, anxiety or depression, the starting point has to be what they could do, what they would like to do, and how the state can help them do it. "This is not a workshy, snowflake generation, you know, who are making mental distress up," he added. "If we provide more opportunities and we provide more support, the overwhelming majority of young people will take that, because that's what they want."
The Political Fix podcast reported that it is widely believed within government that returning older benefits claimants who have been out of work for an extended period back into employment represents a considerable challenge. Presenter Lucy Fisher said: "There's a sense that the Department for Work and Pensions views those people as being just too difficult to try and get back into work, so all the focus is on younger people."
Mr Smyth said Milburn's plan would come at a cost to the government, which is gearing up to reveal a Budget on October 28 amid rising inflation as it attempts to reassure bond markets over its borrowing levels.
